中期報告 2015 INTERIM REPORT 2015projects, Hong Kong Kai Tak Project, Shanghai Poly Phili Ya Yuan , Nanning Poly Ling Xiu Qian Cheng and Harbin Poly City commenced construction

INTERIM REPORT 2015中期報告 2015

股份代號

Interim Report 2015 中

期報告

Poly Property Group C

o., Limited 保

利置業集團有限公司

CONTENTSCorporate Information 02

Management Discussion and Analysis 03

Interim Results 14

Condensed Consolidated Statement of Profit or Loss 14

Condensed Consolidated Statement of Comprehensive Income 15

Condensed Consolidated Statement of Financial Position 16

Condensed Consolidated Statement of Changes in Equity 18

Condensed Consolidated Statement of Cash Flow 19

Notes to the Condensed Consolidated Financial Statements 20

Other Information 35

POLY PROPERTY GROUP CO., LIMITED • INTERIM REPORT 2015

02

Legal AdvisorAshurst Hong Kong

AuditorShu Lun Pan Union (HK) CPA Limited

Principal BankersChina CITIC Bank International LimitedMalayan Banking BerhadAgricultural Bank of China LimitedBank of China LimitedChina Construction Bank CorporationIndustrial and Commercial Bank of China Limited

Investor Relations ConsultantArtemis Associates Limited

Share Registrar and Transfer OfficeComputershare Hong Kong Investor Services LimitedShops 1712–171617th Floor, Hopewell Centre183 Queen’s Road East, Hong Kong

Registered OfficeRoom 2503, Admiralty Centre, Tower 118 Harcourt Road, Hong Kong

Company Websitewww.polyhongkong.comwww.irasia.com/listco/hk/polyhk

CORPORATE INFORMATION

Board of DirectorsExecutive directorsXUE Ming (Chairman)HAN Qingtao (Managing Director)WANG XuYE Li Wen

Non-executive directorIP Chun Chung, Robert

Independent non-executive directorsCHOY Shu KwanLEUNG Sau Fan, SylviaWONG Ka Lun

Audit CommitteeLEUNG Sau Fan, Sylvia (Chairlady)IP Chun Chung, RobertCHOY Shu KwanWONG Ka Lun

Remuneration CommitteeWONG Ka Lun (Chairman)CHOY Shu KwanLEUNG Sau Fan, SylviaXUE MingWANG Xu

Company SecretaryPOON Man Man

INTERIM REPORT 2015 • POLY PROPERTY GROUP CO., LIMITED

03

MANAGEMENT DISCUSSION AND ANALYSIS

For the first half of 2015, Poly Property Group Co., Limited and its subsidiaries (“the Group”) recorded a consolidated turnover of HK$7,489 million (corresponding period in 2014: HK$11,209 million), representing a decrease of HK$3,720 million, or 33.2%, compared with the corresponding period last year. Profit attributable to shareholders amounted to HK$103 million (corresponding period in 2014: HK$1,133 million), representing a decrease of HK$1,030 mil l ion, or 90.9%, compared with the corresponding period last year. Basic earnings per share was HK2.81 cents (corresponding period in 2014: HK31.10 cents), representing a decrease of HK28.29 cents, or 91.0%, compared with the corresponding period last year. Diluted earnings per share was HK2.81 cents (corresponding period in 2014: HK31.00 cents), representing a decrease of 90.9% from the corresponding period last year. As at 30th June, 2015, shareholders’ equity amounted to HK$29.6 billion (31st December, 2014: HK$29.8 billion) and book net asset value per share was HK$8.09 (31st December, 2014: HK$8.14), representing a decrease of 0.7% and 0.6% respectively, compared with the end of last year.

Business ReviewDuring the first half of 2015, the Chinese government continued to adopt a relaxed but proactive stance in its property market policies. By encouraging the re-designation of local inventory of residential housing as social security housing, supporting inventory clearance by property development companies and alleviating the burdens of homebuyers, efforts were made to stimulate the sale of existing inventory and encourage home purchases, in order to resolve the housing issues of people with different needs. In view of the high inventory levels and lacklustre sales in the property market, the central bank announced three successive interest rate cuts and lowered the deposit reserve ratio twice since late 2014, and launched new policies on the purchase of the second property, such as lowering the down payment ratio and reducing loan limits, in order to drive economic development, reduce high inventory level, boost market confidence and lower requirement and cost for property purchase. The Group monitored government policies and market conditions closely and capitalised on market opportunities to expedite sales of its inventory, well accomplishing its sales target set for the first half of the year.

During the period, the Group adhered to its “sales-focused and market-oriented” business philosophies. Under the annual theme of “Sharing with You” (與你共分享), the Group was proactive in creative marketing, as it enhanced on-site experiences at its show rooms and strengthened brand building, inventory clearance and sales breakthrough effectively. In addition, the Group conducted brand campaign under five sub-themes: “Sharing Art (分享藝術), Sharing Happiness (分享幸福), Sharing Harvest (分享收穫), Sharing Achievements (分享成就) and Sharing Love (分享大愛)”, which further complimented the Group’s annual theme. The Group also adopted the all-season marketing theme of “House of Peace and Happiness (悠悅置家)” and launched other monthly promotion activities to boost sales.


04

Meanwhile, the Group adjusted investment pace to be consistent with sales collection by arranging its investment schedules in a reasonable manner and limiting the number of new development projects accordingly. A strategy of skewed investment, which aimed to stimulate sales of existing inventory by launching quality new products, was implemented. Moreover, the Group continued to optimise its capital structure. The average borrowing cost from financial institutions further decreased from 6.9% at the beginning of the year to 6.7%, while the size of off-shore debt continued to grow in proportion steadily. The long-term debt ratio rose to 76% from 61% at the start of the year.

Looking into the second half of 2015, despite impacts of the ongoing macro-economic downturn in China, the property market is coming out of the doldrums and is expected to stabilise due to government policies and other factors. The policy environment is expected to remain positive. Nevertheless, investment in properties is still declining. Imbalances in demand and supply, structural surplus in capacity and high inventory levels will continue to restrain the property market. Therefore, inventory clearance will continue to be the primary focus. Disparity among different cities will continue to intensify, as tier-one cities and certain tier-two cities with stronger fundamentals are expected to continue to lead the market. Meanwhile, the property industry will undergo significant changes, while there is a need for property companies to transform and innovate. Certain companies used their industry positions and resources as a leverage to explore new models which facilitate interaction with property business in areas such as finance, health, Internet and etc., minimise costs and extend their business chains to stimulate profit growth. As such, the property industry is entering a new era. In the second half of the year, the Group will continue to launch new projects in a reasonable pace based on market demand, set price with due regard for market changes while actively exploring corporate innovation. The Group remains confident about achieving its whole-year sales target.

Property SalesIn the first half of 2015, the Property Group (including Poly Property Group Co., Limited, its subsidiaries, joint ventures and associates) recorded contracted sales of approximately 1,307,000 square metres or approximately RMB14.5 billion, achieving 56% of its annual sales target, or RMB26.0 billion, set at the beginning of the year.

During the period, the Property Group launched a total of 43 projects for sale. Of these projects, 2 were debut projects, which were Shenzhen Poly Joy-Zone and Ningbo Poly Wonderland. Shenzhen Poly Joy-Zone was launched for sale on 7th June and received overwhelming market response. Amongst the 503 units offered, 473 were subscribed. Ningbo Poly Wonderland recorded a subscription rate of 95% on 27th June, the date of debut. Good performance was also reported with continual launches, with standalone projects such as Suzhou Poly Lake Mansion and Shanghai Phili House generating sales of over RMB1.1 billion and nearly RMB1.0 billion, respectively.


05

The contracted sales of properties in the Yangtze River Delta Region, the Pearl River Delta Region, Southwestern Region and Other Regions accounted for 38%, 26%, 18% and 18% of the total, respectively.

Region and Respective Projects

Contracted Salesfor the First Half

of 2015*

Percentage ofTotal

ContractedSales

(RMB million) (%)

Yangtze River Delta Region 5,504 38%Shanghai 2,950Suzhou 1,938Ningbo 540Deqing 76Pearl River Delta Region 3,772 26%Guangzhou/Foshan 1,930Shenzhen/Huizhou 1,842Southwestern Region 2,549 18%Guiyang/Zunyi 1,672Nanning 487Liuzhou 370Kunming 20Other Regions 2,630 18%Wuhan 356Harbin 395Jinan 1,478Yantai/Weihai 323Hainan 78

Total: 14,455 100%

* Note: including car parking spaces

In the second half of 2015, the Property Group plans to launch around 6 new projects for sale, including Shanghai Poly International Plaza, Shanghai Poly Greenland Plaza, Guangzhou Poly Gratified West Bay, Nanning Poly Ling Xiu Qian Cheng, Wuhan Poly Up Town and Harbin Poly City, depending on market conditions and the progress of construction.


06

Newly Commenced ConstructionIn the first half of 2015, the Property Group commenced construction on 11 new projects with a gross floor area of approximately 902,000 square metres. Of these new projects, Hong Kong Kai Tak Project, Shanghai Poly Phili Ya Yuan , Nanning Poly Ling Xiu Qian Cheng and Harbin Poly City commenced construction for the first time. As at the end of 30th June, 2015, the Property Group held a total of 45 projects under construction, with a gross floor area of approximately 8,740,000 square metres.

Project

Gross FloorArea of

CommencedConstruction

InterestsAttributable

to the Group(’000

square metres) (%)

Shanghai Poly Phili Ya Yuan 124 50%Guangzhou Nansha Poly City 120 49%Foshan Poly Central Park 38 100%Guiyang Poly Park 2010 37 100%Nanning Poly Ling Xiu Qian Cheng 172 38%Wuhan Poly Up Town 103 50%Harbin Poly City 115 100%Jinan Poly Hyde Mansion 45 100%Jinan Poly Center 49 85%Jinan Poly Elegant Garden 29 80%Hong Kong Kai Tak Project 70 100%

Total: 902


07

Recognised Property SalesIn the first half of 2015, the Group recognised total sales of RMB5,609 million from property development, with a gross floor area sold reaching approximately 534,900 square metres. The breakdown of the recognised sale from each project is as follows:

Region with Respective Projects

SalesRecognisedin the First

Half of 2015

Percentage ofTotal

RecognisedSales

(RMB million) (%)

Yangtze River Delta Region 1,854 33%1. Shanghai Poly Royal Garden 5872. Shanghai Poly Town 13. Shanghai Poly Lakeside Garden 94. Shanghai Poly Star Island 225. Shanghai Poly Elegant Mansion 2146. Shanghai Poly Felicity 337. Suzhou Poly West Bank Villa 1618. Suzhou Poly Lake Mansion 6329. Ningbo Poly City 15610. Deqing Poly Origin 39Pearl River Delta Region 1,112 20%11. Guangzhou Poly City 812. Guangzhou Poly Golf Shire 22913. Guangzhou Poly Zephyr City 17214. Foshan Poly Cullinan Garden 13115. Foshan Poly Prestige City 18416. Shenzhen Poly Up Town 29317. Huizhou Poly Deutch Kultur 95Southwestern Region 831 15%18. Nanning Poly Sincere Garden 0.419. Nanning Poly City 12420. Nanning Poly Aegean Sea 8221. Nanning Poly Phoenixia Garden 0.722. Nanning Poly Century 123. Nanning Poly Landscape 0.824. Nanning Poly Upper House 0.525. Nanning Poly Crescendo 8226. Liuzhou Poly Merization World 10927. Guiyang Poly Spring Street 5328. Guiyang Poly Clouds Hill International 229. Guiyang Poly Hot Spring Newisland 930. Guiyang Poly International Center (2)31. Guiyang Poly Park 2010 14332. Kunming Poly Sky and Earth 226


08

Region with Respective Projects

SalesRecognisedin the First

Half of 2015

Percentage ofTotal

RecognisedSales

(RMB million) (%)

Other Regions 1,812 32%33. Wuhan Poly Royal Palace 134. Wuhan Poly Blue Ocean District 1135. Poly Harbin Contemporary No. 9 Park Life 2336. Harbin The Tsinghua Summer Palace of Poly 4237. Harbin Poly Yi He Homeland 0.138. Harbin Poly The Water’s Fragrant Dike 9039. Jinan Poly Hyde Mansion 15340. Jinan Poly Garden 0.341. Jinan Poly Center 1942. Jinan Poly Daming Lake 143. Jinan Poly Elegant Garden 67344. Weihai Poly Triumph Mansion 4445. Yantai Poly Champs Elysees Mansion 37146. Yantai Poly Blossom Garden 30647. Hainan Poly Peninsula No. 1 78

Total: 5,609 100%

New Land ReservesIn the first half of 2015, the Group adhered to prudent investment strategies and obtained two land parcels located in Wuhan and Weihai, respectively. The new land reserves have a total site area of approximately 100,000 square metres and a planned gross floor area of approximately 370,000 square metres. Land cost was maintained at a reasonable level.

Land ReservesPlannedProperty Type

TotalSite Area

TotalPlanned

GrossFloor Area


to the Group(squaremetres)

(squaremetres)

Wuhan Poly City, Phase II Residential 59,000 243,000 68%Weihai Poly Maple Valley Residential 45,000 131,000 70%

Total: 104,000 374,000


09

Wuhan Poly City, Phase IIThe project is located between Youyi Avenue and Qingsi Avenue (Tuanjie Avenue) in Wuhan, on a block surrounded by 4 subway lines and sitting adjacent to the inner ring and the second ring. Superior traffic convenience is afforded as Wuhan Happy Valley, Wuhan Tiandi, Wuhan Train Station and Jiangtan Park are all accessible with a 10-minute drive. The project integrates major urban functions, such as residential community, work, commerce and entertainment, and offers a wide range of property types including residence, SOHO, commercial cluster, leisure shopping walk, innovative hotel, office, community service and nursery. The development of this project will provide Wuchang and Xudong Districts with a dynamic “city” with a strong cultural aura and excellent conditions for living.

Weihai Poly Maple ValleyThe project is located to the north of Sifang Road in Huancui District, Weihai, facing Huanshan Road in the west. It is surrounded by hills with sea views in one direction, and enjoys superior natural resources from a national 4A scenic zone nearby. Proximity to Qingdao Road and Tongyi Road, the main highways of the city, ensures traffic convenience. Within the surrounding area of the project, there are comprehensive ancillary facilities for commerce, education and medical care, as well as cultural and sport facilities such as Poly Cultural Center, Tao Jia Kuang Community Cultural Center and Tao Jia Kuang Community Fitness Plaza. The project will be built into a community with cultural harmony comprising of mainly high-rises.

Investment PropertiesThe Group has various investment properties and hotels located in first-tier cities and second-tier provincial capitals with a total gross floor area of approximately 540,000 square metres, of which approximately 500,000 square metres are attributable to the Group.


10

In the first half of 2015, the occupancy rates for the Group’s office buildings and shopping malls remained stable, with higher rental rates compared with the corresponding period last year. As for hotel operations, Beijing Poly Plaza, Wuhan Poly Hotel and Regal Poly Guiyang Hotel also maintained satisfactory occupancy rates.

Location ProjectGross Floor

Area


to the Group Property Category(’000 square

metres) (%)

Beijing Beijing Poly Plaza 95 75% Office building, hotel and theatre

Shanghai Shanghai Stock Exchange Building (partial)

48 100% Office building

Shanghai Shanghai Poly Plaza (partial)

61 90% Office and commercial building

Shenzhen Shenzhen Poly Cultural Plaza (partial)

133 100% Shopping mall and theatre

Wuhan Wuhan Poly Plaza (partial) 130 100% Office and commercial building

Wuhan Poly Hotel 34 100% HotelGuiyang Regal Poly Guiyang Hotel 39 66.5% Hotel

Total: 540

Property ManagementThe Group holds various property management companies which engage in the management of residential properties, hotels and high-end properties. The companies are leading property management providers in China and have received numerous titles and awards, such as “Outstanding Property Management Project of the PRC (全國物業管理優秀項目)” and “Outstanding Provincial Property Management Project (省級物業管理優秀項目)”.

In the first half of 2015, the Group’s property management companies recorded total income of RMB198,751,000, representing an increase of 12.75% compared with the corresponding period last year. The companies managed 124 property projects, including office buildings, hotels, shopping malls, villas and private residences. These projects have an aggregate gross floor area of 24,392,700 square metres, representing an increase of 27.94% compared with the corresponding period last year.


11

FINANCIAL REVIEW

Liquidity and Capital StructureAs at 30th June, 2015, the shareholders’ equity of the Group amounted to HK$29,613,660,000 (31st December, 2014: HK$29,762,327,000), while the net asset value per share was HK$8.09 (31st December, 2014: HK$8.14). As at 30th June, 2015, the Group’s gearing ratio (on the basis of the amount of total liabilities divided by total assets) was 74.9% (31st December, 2014: 73.6%).

As at 30th June, 2015, the Group had outstanding bank and other borrowings (including the notes payable) of HK$56,124,989,000. In terms of maturity, the outstanding bank and other borrowings ( inc luding the notes payable ) can be d iv ided into HK$13,915,516,000 (25%) to be repaid within one year, HK$19,234,086,000 (34%) to be repaid after one year but within two years and HK$22,975,387,000 (41%) to be repaid after two years but within five years. In terms of currency denomination, the outstanding bank and other borrowings (including the notes payable) can be divided into HK$46,230,576,000 (83%) in Renminbi, HK$7,014,076,000 (12%) in United State dollars and HK$2,880,337,000 (5%) in Hong Kong dollars.

51% of the bank and other borrowings (including the notes payable) of the Group are subject to fixed interest rates and the remaining 49% are subject to floating interest rates. Therefore, under circumstances of interest rates uncertainty or fluctuations or otherwise as appropriate, the Group will consider the use of hedging instruments (including interest rate swaps), in order to manage interest rate risks.

As at 30th June, 2015, the Group had net current assets of HK$62,258,047,000 and total bank balances of HK$19,829,176,000 (31st December, 2014: HK$53,876,791,000 and HK$17,756,204,000, respectively). With the available banking facilities and cash revenue from business operations, it is believed that the Group has sufficient resources to meet the foreseeable working capital demands and capital expenditure.

The monetary assets and liabilities and business transactions of the Group are mainly carried and conducted in Hong Kong dollars, United State dollars and Renminbi. The Group maintains a prudent strategy in its foreign exchange risk management, where foreign exchange risks are minimised via balancing the monetary assets versus monetary l iabil it ies, and foreign exchange revenue versus foreign exchange expenditures. The management believes that the foreign exchange rate between Hong Kong dollars and United State dollars is relatively stable. On the other hand, despite the recent fluctuation of Renminbi exchange rate, the management believes that the fluctuation of the Renminbi exchange rate against Hong Kong dollars and United State dollars will not fluctuate materially in the foreseeable future, if any. In this regard, the Group believes that its exposure to foreign exchange risks is minimal.


12

Pledge of AssetsAs at 30th June, 2015, the carrying value of the Group’s assets which were pledged to secure credit facilities granted to the Group are as follows:

30th June,2015

31st December,2014

HK$’000 HK$’000

Investment properties 3,925,781 3,949,832Hotel properties 702,911 702,911Buildings 113,053 113,432Prepaid lease payments 280,913 284,095Properties under development 23,579,144 24,036,940Properties held for sale 1,223,202 2,195,906Bank deposits 1,348,784 1,519,231

31,173,788 32,802,347

In addition to above pledge of assets, as at 30th June, 2015, the Group’s interests in certain subsidiaries were pledged to secure credit facilities granted to the Group. The details of net asset value of subsidiaries are as follows:

30th June,2015

31st December,2014

HK$’000 HK$’000

Total assets 6,830,524 6,802,099Total liabilities (5,988,170) (5,966,803)

842,354 835,296

There are duplication between the carrying value of the Group’s assets and the Group’s interests in certain subsidiaries being pledged.

Contingent LiabilitiesThe Group arranged mortgage loan facilities with certain banks for purchasers of property units and provided guarantees to banks to secure obligations of such purchasers of repayment. The maximum guarantees given to banks amounted to HK$22,615,770,000 as at 30th June, 2015 (31st December, 2014: HK$19,283,061,000). Such guarantees will terminate upon the earlier of (i) issue of the real estate ownership certificate; and (ii) the satisfaction of the mortgage loans by the buyers of the properties. The Group has not recognised any deferred income in respect of these guarantees as its fair value is considered to be minimal by the Directors. The Directors also consider that the fair value of the underlying properties is able to cover the outstanding mortgage loan guaranteed by the Group in the event the purchasers default payments to the banks.


13

At 30th June, 2015, the Group had given guarantees to certain banks in respect of credit facilities granted to certain associates and joint ventures of the Group amounting to HK$1,177,215,000 (31st December, 2014: HK$1,177,215,000) and HK$2,844,886,000 (31st December, 2014: HK$2,849,342,000), respectively, of which HK$1,177,215,000 (31st December, 2014: HK$1,177,215,000) and HK$2,844,886,000 (31st December, 2014: HK$2,849,342,000) had been utilised by the associates and joint ventures, respectively.

STAFF

As at 30th June, 2015, the Group employed about 10,851 (30th June, 2014: 9,235) staff with remuneration for the period amounted to approximately HK$516 million. The Group provides its staff with various benefits including year-ended double-pay, discretionary bonus, contributory provident fund, share options and medical insurance. Staff training is also provided as and when required.


14

INTERIM RESULTS

The directors (the “Directors/Board”) of Poly Property Group Co., Limited (the “Company”) hereby announce the unaudited condensed consolidated results of the Company and its subsidiaries (the “Group”) for the six months ended 30th June, 2015 with comparative figures for the six months ended 30th June, 2014 as follows:

CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

Six months ended 30th June,2015 2014

Notes HK$’000 HK$’000(Unaudited) (Unaudited)

Revenue 2 7,489,404 11,208,881Cost of sales (6,216,323) (8,391,704)

Gross profit 1,273,081 2,817,177Other income 269,019 204,247Selling expenses (296,214) (321,248)Administrative expenses (569,294) (647,317)Decrease in fair value of held-for-trading investments – (126)Increase in fair value of investment properties 513,202 828,236Gain on disposal of interests in subsidiaries – 20,668Finance costs (476,205) (415,292)Share of results of associates (6,628) (2,076)Share of results of joint ventures 899 32,443

Profit before taxation 3 707,860 2,516,712Income tax expense 4 (390,975) (1,027,784)

Profit for the period 316,885 1,488,928

Attributable to: Owners of the Company 102,769 1,133,388 Holders of perpetual capital instruments 18 74,666 – Non-controlling interests 139,450 355,540

316,885 1,488,928

Dividends 5 278,277 812,754

Earnings per share 6 — Basic 2.81 cents 31.10 cents

— Diluted 2.81 cents 31.00 cents


15

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


Notes HK$’000 HK$’000(Unaudited) (Unaudited)

Profit for the period 316,885 1,488,928

Other comprehensive incomeItems that may be reclassified subsequently to profit or loss: Change in fair value of available-for-sale investments (317) 6,021

(317) 6,021

Items that will not be reclassified to profit or loss: Surplus arising on revaluation of properties 33,265 24,594

Other comprehensive income before tax effect 32,948 30,615Deferred tax liability arising on revaluation of properties (8,317) (6,148)

Other comprehensive income for the period, net of tax 24,631 24,467

Total comprehensive income for the period 341,516 1,513,395

Attributable to: Owners of the Company 122,175 1,152,663 Holders of perpetual capital instruments 18 74,666 – Non-controlling interests 144,675 360,732

341,516 1,513,395


16

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30th June,2015

31st December,2014

Notes HK$’000 HK$’000(Unaudited) (Audited)

Non-Current Assets Investment properties 8 11,166,602 10,053,392 Property, plant and equipment 8 2,019,969 2,049,764 Prepaid lease payments — non-current portion 373,995 379,757 Goodwill 293,220 307,612 Interests in associates 301,294 307,923 Interests in joint ventures 481,085 533,765 Available-for-sale investments 136,371 136,688 Deposits paid for acquisition of land use rights 322,563 143,037 Deposits paid for acquisition of subsidiaries 253,165 253,165 Deferred tax assets 488,208 349,309

15,836,472 14,514,412

Current Assets Properties under development 58,978,836 57,432,956 Properties held for sale 25,652,939 27,247,573 Other inventories 138,339 154,565 Trade and other receivables 9 4,580,834 4,074,785 Prepaid lease payments — current portion 11,523 11,523 Held-for-trading investments – 867 Amounts due from associates 10 1,796,894 400,897 Amounts due from joint ventures 11 5,753,459 5,697,412 Amounts due from non-controlling shareholders of subsidiaries 542,497 1,135,801 Taxation recoverable 1,523,376 975,890 Pledged bank deposits 1,348,784 1,519,231 Bank balances, deposits and cash 18,480,392 16,236,973

118,807,873 114,888,473


17

30th June,2015

31st December,2014

Notes HK$’000 HK$’000(Unaudited) (Audited)

Current Liabilities Trade and other payables 12 10,392,015 14,670,333 Pre-sale deposits 25,752,932 19,082,666 Property rental deposits 129,431 116,054 Amount due to the ultimate holding company 13 58,051 58,299 Amount due to an intermediate holding company 14 1,080,933 975,259 Amounts due to fellow subsidiaries 15 1,954,698 2,410,404 Amounts due to joint ventures 11 376,737 10,391 Amounts due to non-controlling shareholders of subsidiaries 1,696,909 1,674,920 Taxation payable 1,192,604 1,762,830 Bank and other borrowings — due within one year 16 13,915,516 20,250,526

56,549,826 61,011,682

Net Current Assets 62,258,047 53,876,791

Total Assets Less Current Liabilities 78,094,519 68,391,203

Capital and Reserves Share capital 17 17,685,677 17,677,143 Reserves 11,927,983 12,085,184

Equity attributable to owners of the Company 29,613,660 29,762,327 Perpetual capital instruments 18 1,340,489 998,696 Non-controlling interests 2,834,047 3,338,192

Total Equity 33,788,196 34,099,215

Non-Current Liabilities Bank and other borrowings — due after one year 16 38,309,473 28,433,069 Notes payable 19 3,900,000 3,900,000 Amount due to the ultimate holding company 13 379,747 379,747 Loan from a fellow subsidiary 227,848 227,848 Deferred tax liabilities 1,489,255 1,351,324

44,306,323 34,291,988

78,094,519 68,391,203


18

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the six months ended 30th June, 2015

Attributable to owners of the Company

Sharecapital

Sharepremium

Shareoption

reserve

Hotelproperties

revaluationreserve

Translationreserve

Capitalredemption

reserve

PRCstatutory

reserve

Investmentrevaluation

reserve

Othercapital

reserve

Assetrevaluation

reserveOther

reserveAccumulated

profits Total

Perpetualcapital

instruments

Non-controlling

shareholdings TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st January, 2015 17,677,143 – 1,099 119,506 1,682,955 – 1,316,011 (16,078) 306,899 16,161 (285,195) 8,943,826 29,762,327 998,696 3,338,192 34,099,215

Total comprehensive income for the period – – – 13,458 – – – (317) – 6,265 – 102,769 122,175 74,666 144,675 341,516Exercise of share options 8,534 – (1,099) – – – – – – – – - 7,435 – – 7,435Dividends paid – – – – – – – – – – – (278,277) (278,277) – – (278,277)Dividends paid to non-controlling shareholders of a subsidiary – – – – – – – – – – – – – – (631,646) (631,646)Capital contribution by non-controlling shareholders – – – – – – – – – – – – – – 13,820 13,820Release upon dissolution of subsidiaries – – – – – – – – – – – – – – (30,994) (30,994)Issue of perpetual capital instruments – – – – – – – – – – – – – 267,127 – 267,127

At 30th June, 2015 17,685,677 – – 132,964 1,682,955 – 1,316,011 (16,395) 306,899 22,426 (285,195) 8,768,318 29,613,660 1,340,489 2,834,047 33,788,196

For the six months ended 30th June, 2014

Attributable to owners of the Company

Sharecapital

Sharepremium

Shareoption

reserve

Hotelproperties

revaluationreserve

Translationreserve

Capitalredemption

reserve

PRCstatutory

reserve

Investmentrevaluation

reserve

Othercapital

reserve

Assetrevaluation

reserveOther

reserveAccumulated

profits Total

Perpetualcapital

instruments

Non-controlling

shareholdings TotalHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1st January, 2014 1,822,319 15,814,698 3,281 92,831 1,682,955 23,917 1,251,856 2,937 307,485 8,676 (285,195) 8,891,287 29,617,047 – 2,985,097 32,602,144

Total comprehensive income for the period – – – 13,254 – – – 6,021 – – – 1,133,388 1,152,663 – 360,732 1,513,395Transfer 15,838,615 (15,814,698) – – – (23,917) – – – – – – – – – –Dividends paid – – – – – – – – – – – (812,754) (812,754) – – (812,754)Capital contribution by non-controlling shareholders – – – – – – – – – – – – – – 18,987 18,987Release upon dissolution of subsidiaries – – – – – – – – – – – – – – (6,248) (6,248)Release upon disposal of subsidiaries – – – – – – – – – – – – – – (29,933) (29,933)

At 30th June, 2014 17,660,934 – 3,281 106,085 1,682,955 – 1,251,856 8,958 307,485 8,676 (285,195) 9,211,921 29,956,956 – 3,328,635 33,285,591


19

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS


HK$’000 HK$’000(Unaudited) (Unaudited)

Net cash used in operating activities (654,379) (4,057,251)

Net cash used in investing activities (557,531) (3,681,946)

Net cash from financing activities 3,455,329 7,162,604

Net increase/(decrease) in cash and cash equivalents 2,243,419 (576,593)

Cash and cash equivalents at beginning of the period 16,236,973 14,826,081

Cash and cash equivalents at end of the period 18,480,392 14,249,488

Analysis of the balance of cash and cash equivalents, represented by — bank balances, deposits and cash 18,480,392 14,249,488


20

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PREPARATIONThe condensed consolidated financial statements and selected explanatory notes have been prepared in accordance with Hong Kong Accounting Standard 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) and applicable disclosure provisions of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

The condensed consolidated financial statements have been prepared in accordance with the same accounting policies adopted in the most recent consolidated financial statements for the year ended 31st December, 2014, except for the changes in accounting policy made when the Group and the Company initially apply financial reporting standards newly applicable to the annual accounting period beginning on 1st January, 2015.

The preparation of consolidated interim financial statements in conformity with HKAS 34 requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates.

The explanatory notes include an explanation of events and transactions that are significant to the understanding of the changes in financial position and performance of the Group since the most recent consolidated financial statements for the year ended 31st December, 2014. The condensed consolidated financial statements and notes thereon do not include all of the information required for full set of financial statements prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRSs”).

The HKICPA has issued the following amendments to HKFRSs and new interpretations that are first effective for the current accounting period of the Group:

HKFRSs (Amendments) Annual Improvements 2010–2012 CycleHKFRSs (Amendments) Annual Improvements 2011–2013 CycleAmendments to HKAS 19 (2011) Defined Benefit Plans: Employee Contributions

The initial application of the above new or revised HKFRSs does not have a material effect on the Group’s results and financial position. The Group has not applied any new and revised HKFRSs or interpretations that have been issued but are not yet effective for the current accounting period.


21

2. REVENUE AND SEGMENT INFORMATIONFor management purposes, the Group is organised into four operating divisions. These divisions are the basis on which the Group reports its segment information.

Information about these segments is presented below:


Propertydevelopment

business

Propertyinvestment

andmanagement

Hoteloperations

Otheroperations

Elimi-nations Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

REVENUEExternal revenue 6,816,257 524,132 95,687 53,328 – 7,489,404Inter-segment revenue* – 71,410 – – (71,410) –

Total revenue 6,816,257 595,542 95,687 53,328 (71,410) 7,489,404

SEGMENT RESULTS 486,449 670,468 (15,356) 8,145 – 1,149,706

Unallocated income 65,667Unallocated expenses (25,579)Finance costs (476,205)Share of results of associates (6,628) (6,628)Share of results of joint ventures 5,489 (4,590) 899

Profit before taxation 707,860Income tax expense (390,975)

Profit for the period 316,885

* Inter-segment revenue were charged with reference to prices charged to external parties for similar services and products.


22

At 30th June, 2015Assets and liabilities

Propertydevelopment

business

Propertyinvestment

andmanagement

Hoteloperations

Otheroperations Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

AssetsSegment assets 98,139,776 11,956,826 1,591,932 267,218 111,955,752Interests in associates 301,294 – – – 301,294Interests in joint ventures 479,820 – – 1,265 481,085Unallocated corporate assets 21,906,214

Total assets 134,644,345

LiabilitiesSegment liabilities 40,602,135 679,119 231,782 221,555 41,734,591Unallocated corporate liabilities 59,121,558

Total liabilities 100,856,149


23


Propertydevelopment

business

Propertyinvestment

andmanagement

Hoteloperations

Otheroperations

Elimi-nations Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

REVENUEExternal revenue 10,607,054 463,525 86,266 52,036 – 11,208,881Inter-segment revenue* – 1,054 – – (1,054) –

Total revenue 10,607,054 464,579 86,266 52,036 (1,054) 11,208,881

SEGMENT RESULTS 1,956,776 943,137 (20,811) 4,595 – 2,883,697

Unallocated income 61,894Unallocated expenses (64,622)Gain on disposal of interests in subsidiaries 20,668 20,668Finance costs (415,292)Share of results of associates (2,076) (2,076)Share of results of joint ventures 39,162 (6,719) 32,443

Profit before taxation 2,516,712Income tax expense (1,027,784)

Profit for the period 1,488,928

* Inter-segment revenue were charged with reference to prices charged to external parties for similar services and products.


24

At 31st December, 2014Assets and liabilities

Propertydevelopment

business

Propertyinvestment

andmanagement

Hoteloperations

Otheroperations Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

AssetsSegment assets 96,883,381 10,689,643 1,590,020 235,072 109,398,116Interests in associates 307,923 – – – 307,923Interests in joint ventures 531,978 – – 1,787 533,765Unallocated corporate assets 19,163,081

Total assets 129,402,885

LiabilitiesSegment liabilities 38,512,432 771,738 221,951 47,053 39,553,174Unallocated corporate liabilities 55,750,496

Total liabilities 95,303,670

3. PROFIT BEFORE TAXATION


HK$’000 HK$’000

Profit before taxation has been arrived at after charging/(crediting):

Amortisation of prepaid lease payments 5,762 6,095Depreciation of property, plant and equipment 67,278 71,234Share of tax of joint ventures (included in share of results of joint ventures) 5,986 20,312Gain on disposal of interests in subsidiaries – (20,688)Loss on disposal of investment properties 5,080 8,987


25

4. INCOME TAX EXPENSE


HK$’000 HK$’000

The charge comprises:

Hong Kong profits tax calculated at 16.5% (30th June, 2014: 16.5%) of the estimated assessable profits for the period – –PRC enterprise income tax 201,288 484,463

201,288 484,463

Land appreciation tax 198,971 329,289

Deferred taxation (9,284) 214,032

390,975 1,027,784

Hong Kong profits tax has not been provided as the Group has no estimated assessable profits which were earned in or derived from Hong Kong during the period.

PRC enterprise income tax is calculated in accordance with the relevant laws and regulations in the PRC.

5. DIVIDENDS


HK$’000 HK$’000

2014 final dividend of HK$0.076 per share (2014: 2013 final dividend of HK$0.223 per share) 278,277 812,754

The Directors have decided not to declare any interim dividend for the six months ended 30th June, 2015 (30th June, 2014: HK$Nil).


26

6. EARNINGS PER SHAREThe calculation of basic and diluted earnings per share for the six months ended 30th June, 2015 is based on the following data:


HK$’000 HK$’000

Earnings:Profit for the period attributable to owners of the Company 102,769 1,133,388


Number of shares:Weighted average number of ordinary shares for the purposes of basic earnings per share 3,661,397,405 3,644,637,046Effect of dilutive potential ordinary shares on share options 57,571 10,900,039

Weighted average number of ordinary shares for the purposes of diluted earnings per share 3,661,454,976 3,655,537,085

7. TRANSFER TO AND FROM RESERVESDuring the six months ended 30th June, 2015, the Group’s subsidiaries in the PRC did not appropriate any amount net of non-controlling interests’ share out of accumulated profits to the PRC statutory reserves (30th June, 2014: HK$Nil).

8. MOVEMENTS IN INVESTMENT PROPERTIES AND PROPERTY, PLANT AND EQUIPMENTDuring the period, the net decrease to the Group’s property, plant and equipment amounted to approximately HK$30 million (30th June, 2014: net increase HK$30 million). Additions of capital expenditure paid for construction in progress, renovation work and additions of motor vehicles and furniture and fixture amounted to HK$28 million (30th June, 2014: HK$77 million). The depreciation charge of HK$67 million (30th June, 2014: HK$71 million) was noted. Out of which, HK$25 million (30th June, 2014: HK$25 million) hotel properties depreciation charge was eliminated based on revaluation as at 30th June, 2015.

The Group’s investment properties and hotel properties at 30th June, 2015 were fair valued by AA Property Services Limited, an independent professional surveyor and property valuer not connected with the Group. AA Property Services Limited is a member of the Hong Kong Institute of Surveyors and has appropriate qualifications and recent experiences in the valuation of similar properties in the relevant locations. The valuation of investment properties was arrived at by either (i) reference to comparable sales transactions as available in the relevant market; or (ii) on the basis of capitalisation of rental income derived from existing tenancies. The valuation of hotel properties was arrived at by either (i) discounting the construction cost; or (ii) the income approach, whereby the income derived from the hotel operations with regard to past trading accounts are capitalised at an appropriate rate of return to arrive at the value of the property interests with due allowance for outgoings and expenses.


27

For the period ended 30th June, 2015, the increase in fair value of investment properties amounted to approximately HK$513 million (30th June, 2014: HK$828 million).

Additional units of properties transferred from properties held for sale to investment properties amounted to HK$656 million (30th June, 2014: HK$10 million). The increase was offset by disposal of investment properties of HK$71 million (30th June, 2014: HK$37 million) during the current period.

9. TRADE AND OTHER RECEIVABLESThe credit terms in connection with sales of properties granted to the customers are set out in the sale and purchase agreements and vary from agreements. There is no concentration of credit risk with respect to trade receivables arise from sales of properties as the Group has numerous customers. In respect of sales of goods granted to trade customers, the Group allows an average credit periods ranging from 30 days to 90 days. The following is an aged analysis of trade receivables net of allowance for doubtful debts at the end of the reporting period:

30th June,2015

31st December,2014

HK$’000 HK$’000

0 to 30 days 737,793 753,08931 to 90 days 36,245 29,716More than 90 days 445,469 456,092

Total trade receivables 1,219,507 1,238,897Bills receivables – 204Other receivables 3,361,327 2,835,684

4,580,834 4,074,785

10. AMOUNTS DUE FROM ASSOCIATES

30th June,2015

31st December,2014

HK$’000 HK$’000

— Interest-free 37,989 2,788— Fixed rate of 8% 68,983 50,628— Fixed rate of 8.9% 1,310,175 347,481— Fixed rate of 10% 379,747 –

1,796,894 400,897

The amounts are unsecured and repayable on demand, except for HK$68,983,000 (31st December, 2014: HK$50,628,000) are repayable within one year.


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11. AMOUNTS DUE FROM/TO JOINT VENTURES

30th June,2015

31st December,2014

HK$’000 HK$’000

Amount due from joint ventures:— Interest-free 108,963 357,508— Fixed rate of 8% 1,777,197 3,464,644 — Fixed rate of 8.9% 1,012,658 –— Fixed rate of 8.95% 253,165 –— Fixed rate of 10% 253,165 –— Fixed rate of 10.16% – 388,550— Fixed rate of 10.7% 688,465 519,578— Fixed rate of 11% 329,114 –— Fixed rate of 15% 468,354 –— Benchmark rate in the PRC 123,975 393,968— 110% of benchmark rate in the PRC 738,403 573,164

5,753,459 5,697,412

Amount due to joint ventures:— Interest-free 376,737 10,391

The amounts are unsecured and repayable on demand.

12. TRADE AND OTHER PAYABLESThe following is an aged analysis of trade payables at the end of the reporting period:

30th June,2015

31st December,2014

HK$’000 HK$’000

0 to 30 days 2,486,096 8,282,86931 to 90 days 180,616 369,830More than 90 days 4,997,140 2,066,791

Total trade payables 7,663,852 10,719,490Bills payables 433,749 1,168,970Other payables 2,294,414 2,781,873

10,392,015 14,670,333


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13. AMOUNT DUE TO THE ULTIMATE HOLDING COMPANY

30th June,2015

31st December,2014

HK$’000 HK$’000

— Interest-free 23,995 24,243— 92% of benchmark rate in the PRC 34,056 34,056— 96.5% of benchmark rate in the PRC 379,747 379,747

437,798 438,046Less: Amount due within one year shown under current liabilities (58,051) (58,299)

Amount due after one year 379,747 379,747

The amount is unsecured and repayable on demand, except the amount of HK$34,056,000 (31st December 2014: HK$34,056,000) and HK$379,747,000 (31st December 2014: HK$379,747,000) which were repayable within one year and in the year of 2017, respectively.

14. AMOUNT DUE TO AN INTERMEDIATE HOLDING COMPANY

30th June,2015

31st December,2014

HK$’000 HK$’000

— Interest-free 187,593 26,856— Fixed rate of 6.4% 506,329 506,329— Fixed rate of 7.2% 379,747 379,747— Benchmark rate in the PRC plus 0.5% 3,741 3,741— Benchmark rate in the PRC plus 1% 3,523 58,586

1,080,933 975,259

The amount is unsecured and repayable on demand, except the amount of HK$893,340,000 (31st December 2014: HK$948,403,000) which is repayable within one year.


30

15. AMOUNTS DUE TO FELLOW SUBSIDIARIES

30th June,2015

31st December,2014

HK$’000 HK$’000

— Interest-free 1,726,850 2,233,189— 7.27% plus the movement of the benchmark rate in the PRC 227,848 177,215

1,954,698 2,410,404

The amounts are unsecured and repayable on demand.

16. BANK AND OTHER BORROWINGSDuring the period, the Group obtained new bank and other borrowings in the amounts of HK$17,627 million (30th June, 2014: HK$18,886 million), which bear interest at market rates. The Group also repaid approximately HK$14,086 million (30th June, 2014: HK$10,927 million) during the period.

17. SHARE CAPITAL

Number ofordinary shares Amount

HK$’000

Ordinary shares, issued and fully paid: At 1st January, 2015 3,655,682,046 17,677,143 Exercise of share options (Note) 5,855,000 8,534

At 30th June, 2015 3,661,537,046 17,685,677

Note:

During the six months ended 30th June, 2015, 5,855,000 share options were exercised by the eligible option holders, resulting in the issue of 5,855,000 ordinary shares in the share capital of the Company at a total consideration of HK$7,435,000.


31

18. PERPETUAL CAPITAL INSTRUMENTSDuring the year ended 31st December, 2014, the Group issued perpetual capital instruments to independent third parties with an aggregate principal amount of RMB788,970,000 (approximately HK$998,696,000). During the six months ended 30th June, 2015, the Group further issued perpetual capital instruments to independent third parties with an aggregate principal amount of RMB211,030,000 (approximately HK$267,127,000). As at 30th June, 2015, the aggregate pr incipal amount of perpetual capital instruments amounted to RMB1,000,000,000 (approximately HK$1,265,823,000) in total.

The perpetual capital instruments have no maturity date and the distribution payments can be deferred at the discretion of the Group. Therefore, the perpetual capital instruments are classified as equity instruments and recorded in equity in the condensed consolidated statement of financial position.

Profit attributable to holders of perpetual capital instruments for the six months ended 30th June, 2015 amounted to HK$74,666,000 (30th June, 2014: HK$Nil) and no distribution was made to holders of perpetual capital instruments for the six months ended 30th June, 2015 (30th June, 2014: HK$Nil).

19. NOTES PAYABLEOn 16th May, 2013, the Group issued the 4.75% notes due 2018 in the aggregate principal amount of US$500,000,000 (equivalent to HK$3,900,000,000). The notes bear interest at the rate of 4.75% per annum, which are payable semi-annually in arrears on the interest payment dates falling 16th May and 16th November in each year.

20. DISPOSAL OF SUBSIDIARIESOn 21st January, 2014, the Group entered into a sale and purchase agreement with a third party to dispose of its 37% equity interest in 昆明保利房地產開發有限公司, which is engaged in property development business. The disposal was completed on 28th January, 2014.

On 13th June, 2014, the Group entered into a sale and purchase agreement with a third party to dispose of its 50% equity interest in 上海隆威投資管理有限公司, which is engaged in property development business. The disposal was completed on 13th June, 2014.


32

The net assets of subsidiaries at the date of disposal were as follows:

昆明保利房地產開發有限公司

上海隆威投資管理有限公司 Total

HK$’000 HK$’000 HK$’000

Net assets disposed of 65,980 126,780 192,760Gain (loss) on disposal 20,767 (99) 20,668

Total consideration 86,747 126,681 213,428

Total consideration was satisfied by: Cash consideration 46,835 63,291 110,126 Interests in joint ventures 39,912 63,390 103,302

86,747 126,681 213,428

Net cash inflow arising on disposal: Cash consideration 46,835 63,291 110,126 Bank balances, deposits and cash disposed of (4,470) (142,603) (147,073)

42,365 (79,312) (36,947)

21. CONTINGENT LIABILITIESThe Group arranged mortgage loan facilities with certain banks for purchasers of property units and provided guarantees to banks to secure obligations of such purchasers of repayment. The maximum guarantees given to banks amounted to HK$22,615,770,000 as at 30th June, 2015 (31st December, 2014: HK$19,283,061,000). Such guarantees will terminate upon the earlier of (i) issue of the real estate ownership certificate; and (ii) the satisfaction of the mortgage loans by the buyers of the properties. The Group has not recognised any deferred income in respect of these guarantees as its fair value is considered to be minimal by the Directors. The Directors also consider that the fair value of the underlying properties is able to cover the outstanding mortgage loan guaranteed by the Group in the event the purchasers default payments to the banks.

At 30th June, 2015, the Group had given guarantees to certain banks in respect of credit facilities granted to certain associates and joint ventures of the Group amounting to HK$1,177,215,000 (31st December, 2014: HK$1,177,215,000) and HK$2,844,886,000 (31st December, 2014: HK$2,849,342,000), respectively, of which HK$1,177,215,000 (31st December, 2014: HK$1,177,215,000) and HK$2,844,886,000 (31st December, 2014: HK$2,849,342,000) had been utilised by the associates and joint ventures, respectively.


33

22. CAPITAL COMMITMENTS

30th June,2015

31st December,2014

HK$’000 HK$’000

Capital expenditure contracted for but not provided in the condensed consolidated financial statements in respect of: — property development expenditures 13,947,978 13,862,585 — acquisition of land use rights 998,402 750,789

14,946,380 14,613,374

The Group did not have any capital expenditure authorised but not contracted for as at 30th June, 2015 and 31st December, 2014.

23. MATERIAL RELATED PARTY TRANSACTIONSDuring the current period, the Group entered into the following material related party transactions:

(I) Related parties:


HK$’000 HK$’000

Property rental income (note a) 5,776 5,306Theatre operating expenses (note b) 4,430 6,962Construction fee paid (note c) 291,075 937,785Interest expenses (note d) 82,891 96,185Interest income (note e) 157,566 72,250Guarantee charges (note f) 8,972 –Management fee income 632 632

Notes:

(a) The property rental income received from subsidiaries of the ultimate holding company, which were charged in accordance with the relevant tenancy agreement.

(b) The theatre operating expenses were paid to a joint venture for the operation and management of a theatre.

(c) The construction fee paid to a subsidiary of the ultimate holding company was charged at market rate.


34

(d) The interest expenses derived from loans advanced from the ultimate holding company, an intermediate holding company and fellow subsidiaries, which carried interest at a fixed rate of 6.4%, 7.2%, benchmark rate in the PRC plus 0.5% to 1%, 92% of benchmark rate in the PRC to 96.5% of benchmark rate in the PRC, 7.27% plus the movement of the benchmark rate in the PRC.

(e) The interest income derived from loans advanced to associates and joint ventures, which carried interest at a fixed rate of 8% to 15%, benchmark rate in the PRC to 110% of benchmark rate in the PRC.

(f) The guarantee charges were paid to the ultimate holding company and a fellow subsidiary for acting as a guarantor of bank loans borrowed by subsidiaries of the Group and it was charged at 1% on the maximum guarantee amount.

In addition to the above transactions, on 11th April, 2014, the Group and a fellow subsidiary, Poly Culture Group Corporation Limited (“Poly Culture”), increased the share capital of Guilin Poly Culture Investment Development Co., Ltd (“Guilin Poly Culture”), which was originally a wholly-owned subsidiary of Poly Culture with share capital of RMB10 million. The Group and Poly Culture further contributed RMB50 million and RMB40 million of the share capital of Guilin Poly Culture, respectively, and Guilin Poly Culture became a joint venture of the Group.

(II) Compensation to key management personnel


HK$’000 HK$’000

Short-term benefits 10,862 9,940Post-employment benefits 239 224

11,101 10,164

The remuneration of Directors and key executives is determined by the remuneration committee have regard to the performance of individuals and market trends.


35

OTHER INFORMATION

INTERIM DIVIDEND

The Board has resolved not to declare the payment of an interim dividend for the six months ended 30th June, 2015 (corresponding period in 2014: HK$Nil).

SHARE OPTION SCHEME

Details of the equity-settled share option schemes adopted by the Company are as follows:

2003 Share Option SchemeThe Company adopted a share option scheme (the “2003 Share Option Scheme”) pursuant to an ordinary resolution passed on 28th May, 2003 (the “Adoption Date”) and it has expired at the tenth anniversary of the Adoption Date on 27th May, 2013, which was in accordance with the revised Chapter 17 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) effective on 1st September, 2001.

Following the expiration of 2003 Share Option Scheme, no further share options could be granted but the provisions of the scheme shall remain in full force and effect in all other respects in relation to the share options previously granted thereunder. All outstanding share options granted before the expiration of the 2003 Share Option Scheme and yet to be exercised remain valid.

The following table discloses details of the Company’s share options under the 2003 Share Option Scheme held by employees (including directors) and movement in such holdings during the period:

Outstanding at 1.1.2015

Granted during

the period

Exercised during

the period

Cancelled during

the period

Lapsed during

the period

Outstanding at

30.6.2015

Category 1: Directors – – – – – –

Category 2: Employees (Note) 5,855,000 – (5,855,000) – – –

Total all categories 5,855,000 – (5,855,000) – – –

Note:

Details of specific category of the option is as follows:

Date of grant Exercisable period

Exercise price

per share

14.7.2005 14.7.2005–13.7.2015 1.270


36

5,855,000 (corresponding period in 2014: Nil) share options were exercised during the period. The weighted average share price at the date of share options exercised during the period was HK$3.91 (corresponding period in 2014: HK$Nil).

New Share Option SchemeIn order to provide incentives or rewards to the directors and certain employees of the Company and certain eligible persons (the “Eligible Participants”) to contribute to the long term success of the business of the Group, the board of directors of the Company considers that it is in the best interest of the Company to adopt a new share option scheme.

At the annual general meeting of the Company held on 28th May, 2014, the shareholders of the Company adopted a new share option scheme (the “New Share Option Scheme”), pursuant to which the Eligible Participants may be granted a maximum of 364,463,704 options to subscribe for shares of the Company upon and subject to the terms and conditions of the rules of the New Share Option Scheme. The New Share Option Scheme shall be valid and effective for a period of 10 years commencing on the adoption date of 28th May, 2014 and expiring on 27th May, 2024.

According to the New Share Option Scheme, the board of directors of the Company may grant options to (i) any director and employee of the Company or subsidiaries, or an entity in which the Group holds an interest (“Affiliate”); (ii) any customer, supplier, agent, partner, consultant, adviser or shareholder of or contractor to the Group or an Affiliate; (iii) the trustee of any trust the beneficiary of which or any discretionary trust the discretionary objects of which include any director, employee, customer, supplier, agent, partner, consultant, adviser or shareholder of or contractor to the Group or an Affiliate; or (iv) a company beneficially owned by any director, employee, consultant, customer, supplier, agent, partner, shareholder, adviser of or contractor to the Group or an Affiliate to subscribe for shares in the Company for a consideration of HK$1 for each lot of share options granted.

Share option granted should be accepted within 28 days from the date of grant. The board of directors may at its absolute discretion determine the period during which a share option may be exercised; such period should expire no later than 10 years from the date of grant of the relevant option. The board of directors may also provide restrictions on the exercise of a share option during the period a share option may be exercised.

The exercise price is determined by the board of directors of the Company, and shall not be less than the highest of: (i) the closing price of the Company’s shares on the date of grant; (ii) the average closing price of the Company’s shares for the five business days immediately preceding the date of grant.

The maximum number of shares which may be issued upon exercise of all outstanding options granted and yet to be exercised under the New Share Option Scheme and any other share option schemes of the Company shall not, in aggregate, exceed 30% of the total number of shares in issue.


37

The total number of shares issued and to be issued upon exercise of the options granted to each individual under the New Share Option Scheme and any other share option schemes of the Company (including both exercised, cancelled and outstanding options) in any 12-month period shall not exceed 1% of the total number of shares in issue of the Company.

As at 30th June, 2015, no option was granted under the New Share Option Scheme. The total number of options available for grant is 364,463,704 (30th June, 2014: 364,463,704), representing approximately 9.95% (30th June, 2014: 10%) of the issued share capital of the Company.

DIRECTORS’ INTERESTS IN SECURITIES

As at 30th June, 2015, according to the register maintained by the Company pursuant to Section 352 of the Securities and Futures Ordinance (the “SFO”), or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to Appendix 10 Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) of the Listing Rules, the interests of the Directors in the shares and underlying shares of the Company were as follows:

Long positionOrdinary shares of the CompanyMr. Xue Ming is holding 1,000,000 shares (0.03%) in the issued share capital of the Company.

Mr. Choy Shu Kwan is holding 300,000 shares (0.01%) in the issued share capital of the Company.

Ms. Leung Sau Fan, Sylvia is holding 33,000 shares (0%) in the issued share capital of the Company.

Mr. Wong Ka Lun is deemed to be interested in 80,000 shares (0%) in the issued capital of the Company, being the interests held by his spouse.

Save as disclosed above, as at 30th June, 2015, none of the Directors, chief executives or their associates had any personal, family, corporate or other interests and short positions in the securities of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which is required to be recorded in the register maintained under Section 352 of the SFO or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code in the Listing Rules and none of the Directors, or their spouses or children under the age of 18, had any right to subscribe for the securities of the Company, or had exercised any such right during the period.


38

SUBSTANTIAL SHAREHOLDERS

As at 30th June, 2015, according to the register of substantial shareholders maintained by the Company pursuant to Section 336 of the SFO, the following shareholders had notified the Company of relevant interests in the issued share capital of the Company:

Number of Shares

Approximate percentage

of the issued

Name of shareholderBeneficial

owner

Held by controlled

corporation(s)

Totalnumber of

shares

share capital of the

Company

Long positionCongratulations Company Ltd. 1,037,975,080 – 1,037,975,080 28.35%Source Holdings Limited 228,398,760 100,086,800 328,485,560 8.97%

(Note 1)Ting Shing Holdings Limited – 1,366,460,640 1,366,460,640 37.32%

(Note 2)Poly (Hong Kong) Holdings Limited 112,410,476 1,366,460,640 1,478,871,116 40.39%

(Note 3)Poly Southern Group Limited 253,788,246 – 253,788,246 6.93%China Poly Group Corporation – 1,732,659,362 1,732,659,362 47.32%

(Note 4)

Notes:

1. Source Holdings Limited is deemed by the SFO to be interested in 328,485,560 shares of the Company as a result of its direct holding of 228,398,760 shares and indirect holding of 100,086,800 shares through its wholly-owned subsidiaries, Musical Insight Holdings Ltd. and Wincall Holding Ltd. of 44,658,800 shares and 55,428,000 shares respectively.

2. Ting Shing Holdings Limited is deemed by the SFO to be interested in 1,366,460,640 shares as a result of its indirect holding of 1,366,460,640 shares through its subsidiaries, Source Holdings Limited and Congratulations Company Ltd. of 328,485,560 shares and 1,037,975,080 shares respectively.

3. Poly (Hong Kong) Holdings Limited is deemed by the SFO to be interested in 1,478,871,116 shares as a result of its direct holding of 112,410,476 shares and indirect holding of 1,366,460,640 shares through its wholly-owned subsidiary, Ting Shing Holdings Limited.

4. China Poly Group Corporation owns 100% of Poly (Hong Kong) Holdings Limited and Poly Southern Group Limited and is accordingly deemed by the SFO to be interested in the shares directly and indirectly owned by Poly (Hong Kong) Holdings Limited and Poly Southern Group Limited.

Save as disclosed above, the Company has not been notified of any other relevant interests or short positions in the issued share capital of the Company as at 30th June, 2015.


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PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

During the six months period ended 30th June, 2015, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

Throughout the period under review, the Company has complied with the code provisions as set out in the Corporate Governance Code contained in Appendix 14 to the Listing Rules (the “CG Code”), other than code provisions A.5.1 to A.5.4, A.5.6 and E.1.2 of the CG Code. The reasons for deviation are explained below:

Code Provisions A.5.1 to A.5.4 of the CG Code — Nomination CommitteeUnder code provisions A.5.1 to A.5.4 of the CG Code, listed issuers should, among others, establish a nomination committee with specific written terms of reference. The Company has considered the merits of establishing a nomination committee but is of the view that it is in the best interests of the Company that the Board collectively reviews, deliberates on and approves the structure, size and composition of the Board and the appointment of any new Director. The Board is tasked with ensuring that it has a balanced composition of skills and experience appropriate for the requirements of the businesses of the Group and that appropriate individuals with the relevant expertise and leadership qualities are appointed to the Board to complement the capabilities of the existing Directors.

Code Provision A.5.6 of the CG Code — Board Diversity PolicyUnder code provision A.5.6 of the CG Code, the nomination committee (or the board) of a listed issuer should have a policy concerning diversity of board members, and should disclose the policy or a summary of the policy in the corporate governance report. To comply with the code provision A.5.6, the Board adopted a board diversity policy on 10th March, 2015.

Code Provision E.1.2 of the CG Code — Attendance of Chairman of the Board at the Annual General MeetingsThe chairman should attend the annual general meeting. Due to an important engagement at the relevant time, Mr. Xue Ming, the Chairman, was not able to attend the annual general meeting of the Company held on 27th May, 2015.

The Company considers that sufficient measures have been taken to ensure that the Company’s corporate governance practices are no less exacting than those in the CG Code.


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COMPLIANCE WITH THE MODEL CODE SET OUT IN APPENDIX 10 TO THE LISTING RULES

The Company has adopted a code of conduct regarding directors’ securities transactions on terms no less exacting than the required standard of the Model Code as set out in Appendix 10 to the Listing Rules. Having made specific enquiry of all Directors, all Directors have confirmed that they have complied with the Model Code and the code of conduct regarding directors’ securities transactions adopted by the Company for the six months ended 30th June, 2015.

AUDIT COMMITTEE

The members of the Audit Committee have reviewed with management the accounting principles and practices adopted by the Group and discussed auditing, internal control and financial reporting matters including the review of the unaudited financial statements.

Documents

中期報告 2015 INTERIM REPORT 2015projects, Hong Kong Kai Tak Project, Shanghai Poly Phili Ya Yuan , Nanning Poly Ling Xiu Qian Cheng and Harbin Poly City commenced construction